South Africa: More Developments At The ASA

A court has ruled that the South African Advertising Standards
Authority ("ASA") does not have the
authority to consider and rule on adverts placed by entities that
aren't members of the organisation.

Regular readers will know that the ASA is frequently used as a
forum for dealing with what are essentially trade mark or
passing-off disputes. This is because the ASA Code contains
provisions that prohibit advertising that causes consumer confusion
or involves slavish copying. The ASA also, of course, deals with a
range of other issues, such as advertising that is misleading,
dangerous or offensive.

The ASA's authority has, however, always been a bit tricky.
The ASA is a voluntary organisation, which means that the only
entities who are bound by its rulings are its members (members
agree to abide by its rulings when they join). Yet, the ASA
frequently rules on adverts that have been placed by entities that
aren't members of the organisation. These rulings tend to be
every bit as effective as rulings on adverts placed by entities
that are members. The reason for this is that many of the big media
companies belong to the ASA and, once they're informed of a
negative ASA ruling, they refuse to touch the advert against which
a ruling has been made. It is this system of notification to media
companies (including the so-called "Ad Alert", which
requires members to avoid all adverts of serial offenders) –
coupled with the ASA's practice of publishing its rulings
on its website – that makes the ASA so effective.

Yet, things are changing. We
previously reported on the decision in the case of
Medical Nutritional Institute (Pty) Ltd v The Advertising
Standards Authority (unreported case no. 15/30142, 18
September 2015). In that case, the court granted MNI, a company
that is not a member of the ASA, an urgent order preventing the
ASA:

from imposing any sanctions (including Ad Alerts) in respect of
adverts for an MNI product called AntaGolin;

from doing anything to stop MNI from asserting in its adverts
that AntaGolin combats insulin resistance and assists with weight
loss; and

requiring the ASA to remove its negative ruling against
AntaGolin from its website.

A similar judgment has now been handed down in the case of
Herbex (Pty) Ltd v The Advertising Standards Authority
(unreported case no. 14/45774, 5 May 2016). This case was also
instituted by a company that is not a member of the ASA, and here
the court made a number of orders.

On a general level, the court held that the ASA has no
jurisdiction over any person or entity who is not a member of the
body. It also ordered the ASA to make it clear in the standard
letter that it sends to entities against whom complaints have been
lodged, that it has no jurisdiction over them, and that they're
not bound to participate in the proceedings if they are not
members.

On a more specific level, the court ruled that:

the ASA may not require Herbex (the advertiser in this case) to
participate in any ASA proceedings, or issue instructions or make
rulings against the company;

the ASA cannot adjudicate any further complaints involving
Herbex;

all past ASA rulings made against Herbex are null and
void;

the ASA must remove all rulings against Herbex from its
website; and

the ASA can't require Herbex to pay any further ASA fees,
and that it must repay two significant amounts Herbex
has already paid (one in the order of R79 000, the other some
R89 000).

The judge also made some interesting observations, including
that the ASA has applied to have its Code recognised as an industry
ombud under the Consumer Protection Act, 2008, but that this
application is still pending; as well as the fact that there are
other remedies available for advertising that may be misleading,
such as those provided for by the Consumer Protection Act and the
Medicines and Related Substances Act, 1965.

The judge, however, declined to find that it is improper for the
ASA to use the word "authority" in its name (the argument
is that this implies powers that it doesn't have), or that it
is wrong for the ASA to use case numbers in its rulings (again, the
argument is that this falsely implies certain judicial powers).

It is likely that these two judgments will leave the ASA far
less effective than it's been in the past, with anyone who
wants to complain needing to consider and establish whether the
other party actually belongs to the organisation. It may also make
ASA membership an unattractive option for many companies.
Strangely, the latest judgment has been marked as one that
isn't worth reporting. Given how important this issue is, it
should be reported. In fact, it probably wouldn't be a bad
thing if the issue was considered by a higher court.

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